Chinese Companies Flock to Cross-border Shopping, the Next Big Thing in e-Commerce

It is no exaggeration to say that cross-border online shopping is standing at the cusp of the next great leap forward for China’s booming e-commerce sector. The industry recorded sales of over RMB3 trillion (roughly US$483 billion) in the first half of 2014, of which RMB300 billion came from cross-border retailing, according to data from the China E-commerce Research Center. The compound annual growth rate of China’s cross-border e-commerce trade value stood at 31% during 2008-2013, while the total number of cross-border online shoppers exceeded 18 million in 2013, according a Nielsen survey. The growing market has thus attracted many new entrants to share the growing cake.

Chinese internet company NetEase opened its cross-border e-commerce site Kaola for public test on January 8, expanding beyond its home turf as a news portal and email provider. Kaola now offers a variety of products in baby and maternal care, healthcare, personal care and cosmetics, and plans to expand beyond these categories after its formal launch. According product type and users’ requirements, the goods are either shipped from domestic bonded warehouses (taking 1-3 days for delivery) or from overseas directly (which take 7-30 days).

There is no doubt Kaola could pick up users quickly from NetEase’s existing user base. But going beyond that is not the only factor leading to a successful e-commerce platform: other crucial aspects include product management, logistics and supply chain management, for instance.

SF Express, a leading Chinese express logistics company, today launched cross-border e-commerce platform SF Haitao (our translation). The site’s product inventory is similar to that of Kaola, perhaps not surprisingly given that these three are the best sellers across most cross-border platforms in China. In addition to its logistical backing, SF Haitao also promises to offer foreign products, RMB settlement, and Chinese sales service.

Of course, NetEase and SF-express are not the first companies to target this market, which is becoming increasingly competitive with the entrance of new players.

Moreover, e-commerce platforms dedicated to this sector are evolving rapidly. Metao, the cross-border e-commerce site formerly known as CNTaotao, secured US$30 million of Series B financing led by Vertex Venture in 2014. The company claimed nearly 1 million users with monthly sales of over RMB10 million as of last November. A similar platform Ymatou claimed more than 1 million users and more than 10,000 daily orders, according to Mydrivers.